What is APY in crypto? How it's calculated, with 2026 rates

APY in crypto is the yearly return on a deposit once compounding is counted, and the same product can show different APYs depending on the time window, the fees and the rewards included.

APY in crypto, or annual percentage yield, is the return a deposit would earn over one year if the current rate held and every payment were reinvested. A 5% APY on $1,000 means about $50 after a year. On 23 September 2026 the base APY for supplying USDC on Aave v3 on Ethereum was 3.64%, staked ETH through Lido earned 2.27%, and staked SOL through Jito earned 4.98%, according to DefiLlama's yield data.

Most crypto APYs are variable and move daily with demand for borrowing or with network rewards. The figure on a dashboard describes the recent past or a projection, and the money you end up with depends on what the rate does next.

How is APY calculated?

APY starts from a simple rate, the APR, and adds the effect of earning interest on interest. The formula is APY = (1 + APR / n)ⁿ − 1, where n is the number of times the interest compounds each year. The SEC's compound interest calculator runs the same maths for any balance and period.

A 10% APR paid monthly becomes a 10.47% APY, so $1,000 grows to $1,104.71 after a year. Compounding daily adds a little more, and the gap between APR and APY widens as the rate rises.

APY vs APR in crypto

• APR: the simple yearly rate with no compounding. Lending markets usually quote borrowing costs this way.
• APY: the yearly rate with compounding included. Deposit products and vaults usually quote this, and it's the larger of the two numbers.

Ethereum staking shows why the label matters. Staking dashboards often quote the network rate as an APR, while liquid staking tokens such as stETH add rewards to the holder's balance as they arrive and are usually shown as an APY.

What is 5% APY on $1,000?

About $50 after one year, assuming the rate stays at 5% the whole time, and slightly more if a 5% APR compounds monthly or daily.

Figures are calculated with the formula above, before fees and taxes. Moving from monthly to daily compounding adds less than $1 a year on $1,000 at these rates, so the rate itself matters far more than how often it compounds.

APY to APR calculator

The calculator converts a rate in either direction for any compounding schedule, projects what a deposit earns over a set number of months, and shows the APY left after a vault's performance and management fees.

What is a good APY for crypto?

A good APY is one that sits close to what the asset normally earns, since anything far above that range is being paid for by extra risk, token incentives or borrowed money. These were the benchmark rates on 23 September 2026.

Rates are from DefiLlama's yield data, except the tokenized treasury figure, which is from rwa.xyz. Staking APYs are paid in the staked token, so a 4.98% SOL yield can still lose money in dollars if the SOL price falls.

Why one product shows different APYs on different sites

Two dashboards can report the same pool at different rates on the same day, and usually both are correct. The differences come from a handful of choices:

• Trailing or projected: a trailing APY annualizes what the product earned in the past, while a projected APY annualizes today's rate as if it will hold for a year.
• Time window: Aave's USDC market paid 3.64% on 23 September 2026 against a 30-day average of 3.97%, and a 7-day window gives a third number.
• Base or with rewards: DefiLlama lists one version of the Aave USDC market at 3.64% and another at 5.31%, where the extra 1.67% is paid in incentive tokens.
• Gross or net of fees: a strategy's headline rate may be before management or performance fees, while the share price of a vault already reflects them.
• Token or dollar terms: staking yields are measured in the staked asset, and some sites convert them into dollar returns.

How vault APY is measured from share price

A yield vault issues shares when you deposit, and the value of each share rises as the strategy earns. Under the ERC-4626 standard, the vault reports how many underlying tokens one share can be redeemed for, so the APY can be read straight from that price. Our ERC-4626 explainer covers how shares are priced.

The calculation compares two share prices and annualizes the change. Take a hypothetical vault whose share price moved from 1.0000 to 1.0040 USDC over 30 days:

• Return over the period: 1.0040 / 1.0000 − 1 = 0.40%
• Annualized with compounding: 1.0040^365/30 − 1 = 4.98% APY
• Annualized without compounding: 0.40% × 365 / 30 = 4.87% APR

Share-price APY is net of the fees the vault charges, because fees are taken from the vault's assets before the share price is set. It's also backward-looking, so a 7-day figure can swing with a single strong or weak week. Upshift vault pages show each vault's live APY, and our guide to DeFi yield vaults covers how to compare them.

Is crypto APY safe?

An APY describes a return, and says nothing about the chance of losing the deposit. The main risks sit behind the number:

• Rate risk: variable rates can fall to near zero when borrowing demand dries up.
• Price risk: yields paid in a volatile token can be wiped out by a fall in that token's price.
• Smart contract risk: a bug or exploit in a lending market or vault can drain deposits.
• Counterparty risk: on an exchange, the exchange holds the funds and can pause withdrawals.
• Incentive risk: reward tokens can end or lose value, taking the headline APY with them.

Our explainer on DeFi yield strategies breaks down which risks each strategy type carries. Always make sure to do your own research and be aware of the above and any other risks before depositing.

Frequently asked questions

Does APY make you money?

APY measures growth in the token you deposited. A stablecoin at 5% APY grows by about 5% in dollars if the rate holds, while a staking APY paid in ETH or SOL can still lose money if that token's price falls.

What is a good APY for crypto?

On 23 September 2026, USDC lending paid about 3.6%, ETH staking about 2.3% and SOL staking about 5%. Rates far above those ranges usually include incentives, borrowed money or higher-risk strategies.

Is APY paid daily?

It depends on the product. Lending markets accrue interest every block, vaults grow their share price whenever the strategy reports earnings, and some exchanges pay rewards daily or weekly.

Is APY the same as interest?

APY is interest expressed as a yearly rate with compounding included. In crypto the underlying payment might be borrower interest, staking rewards, trading fees or incentive tokens.

Why is my actual return lower than the APY?

Variable rates change after you deposit, fees may not be included in the quoted figure, and rewards paid in a token can lose value. The APY shown at deposit is a snapshot of one moment.

Keep reading

• How to earn yield on stablecoins in 2026. The main routes and what each pays.
• Where USDC yield comes from. Current USDC rates by venue.
• How to tier vault strategies by risk. Matching a strategy to a risk budget.